The Importance Of Service Marketing Strategy In McDonalds

INTRODUCTION

Creating a service concept is the initial step in building an overall service model .This

task focuses our attention on the first of the 8 Ps, Product elements .All service

organizations face choices concerning the type of products to offer and how to deliver

them to customers .To better understand the nature of services, it’s useful to distinguish

between the core product and the supplementary elements that facilitate its use and

enhance its value for customers. In competitive environments, service marketers need to

focus on innovation, seeking to develop new services or enhance existing ones .New

service development may involve either the product itself or the processes used to create

it .In fact, the availability of new delivery processes for existing services often changes

the nature of the service experience and may even create new benefits.

Services Marketing is a form of marketing which focuses on selling services. Services

can be tricky to sell and the marketing approach for them is much different than the

approach for products. Some companies offer both products and services and must use a

mixture of styles; for example, a store which sells computers also tends to offer services

such as helping people select computers and providing computer repair. Such a store

must market both its products and the supporting services it offers to appeal to customers.

When people market services, the goal is not to get customers to buy a product, but to get

people to do business with a particular company, often in a specific location. For

example, a restaurant offers a service: It provides food to customers, both on-site and in

to-go form in many cases. When the restaurant markets itself, it must convince people

that it is preferable to other restaurants and that its facility is worth the trip.

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The McDonalds’ Story – Genesis.

The story of McDonald’s started in 1954, when its founder Raymond Kroc saw a

hamburger stand in San Bernardino, California and envisioned a nationwide fast food

chain. Kroc proved himself as a pioneer who revolutionized the American restaurant

industry. Today McDonald’s is the world’s largest fast food chain serving 47 million

customers daily. McDonald’s is now one of the most valuable brands globally, worth

more than $25 billion. The Golden Arches and its mascot Ronald McDonald have gained

universal recognition. Though the company has roots in the US, McDonald’s today has

become an accepted citizen of the world.

Business Model

Franchise Model – Only 15% of the total number of restaurants are owned by the

Company. The remaining 85% is operated by franchises. The company follows a

comprehensive framework of training and monitoring of its franchises to ensure

. that they adhere to Quality, Service , Cleanliness and Value propositions offered

by the company to its customers.

Product Consistency – By developing a sophisticated supplier networked

operation and distribution system, the company has been able to achieve

consistent product taste and quality across geographies.

Act like a retailer and think like a brand – McDonald’s focuses not only on

delivering sales for the immediate present, but also protecting its long term brand

reputation.

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SOME OF THE FOOD PRODUCTS OF McDonald’s

Vegetarian Menu

Non-Vegetarian Menu

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SERVICE MARKETING STRATEGY OF McDonald’s

Segmentation, Targeting & Positioning Strategy

McDonald’s uses demographic segmentation strategy with age as the parameter. The

main target segments are children, youth and the young urban family. In order to attract

children McDonalds has Happy Meal with which toys ranging from hot wheels to various

Walt Disney characters are given (the latest in this range is the toys of the movie

Madagascar). For this, they have a tie-up with Walt Disney. At several outlets, it also

provides special facilities like ‘Play Place’ where children can play arcade games, air

hockey, etc. This strategy is aimed at making McDonald’s a fun place to eat. This also

helps McDonald’s to attract the young urban families wanting to spend some quality time

while their children have fun at the outlet. To target the teenagers, McDonald’s has priced

several products aggressively, keeping in mind the price sensitivity of this target

customer. In addition, facilities like Wi-Fi are also provided to attract students to the

outlets like the one at Vile Parle in Mumbai. “Mc Donald’s mein hai kuch baat”

projects McDonald’s as a place for the whole family to enjoy. When McDonald’s entered

in India in 1996 it was mainly perceived as targeting the urban upper class people. Today

it positions itself as an affordable place to eat without compromising on the quality of

food, service and hygiene. The outlet ambience and mild background music highlight the

comfort that McDonald’s promises in slogans like “You deserve a Break Today” &

“Feed your inner child”. This commitment of quality of food and service in a clean,

hygienic and relaxing atmosphere has ensured that McDonald’s maintains a positive

relationship with the customers.

Customer Perception & Customer Expectation

Customer perception is a key factor affecting a product’s success. McDonalds being an

internationally renowned brand brings with it certain expectations for the customers.

Customers expect it to be ambient, hygienic and a little sophisticated brand to enhance

their self image.

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McDonald’s MARKETING MIX (4 P’s)

Product – It is the physical product or service offered to the consumer.

McDonalds has intentionally kept its product depth and product width limited.

McDonalds studied the behavior of the Indian customers and provided a totally

different menu as compared to its International offering. It dropped ham, beef and

mutton burgers from the menu. India is the only country where McDonalds serve

vegetarian menu. Even the sauces and cheese used in India are 100% vegetarian.

McDonalds continuously innovates its products according to the changing

preferences and tastes of its customers. The recent example is the introduction of

the Chicken Maharaja Mac. McDonalds bring with it a globally reputed brand,

world class food quality and excellent customer specific product features.

Place- The place mainly consists of the distribution channels. It is important so

that the product is available to the customer at the right place, at the right time

and in the right quantity. Nearly 50% of U.S.A is within a 3 minute drive from a

McDonald’s outlet. There is a certain degree of fun and happiness that a customer

feels each time he dines at McDonalds. There are certain value propositions that

McDonalds offer to its customers based on their needs. McDonalds offers

hygienic environment, good ambience and great service. Now McDonalds have

also started giving internet facility at their centres and they have been playing

music through radio instead of the normal music. There are certain dedicated

areas for children where they can play while their parents can have some quality

time together.

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Price- The pricing matrix strategy shows:

McDonald’s came up with a very catchy punch line “Aap ke zamane mein ,baap ke

zamane ke daam”. This was to attract the middle and lower class consumers and the

effect can clearly be seen in the consumer base McDonalds has now. McDonalds has

certain value pricing and bundling strategies such as happy meal, combo meal, family

meal etc to increase overall sales volumes.

Promotion- There are three main objectives of advertising for McDonald’s are to

make people aware of an item, feel positive about it and remember it.

McDonald’s does its promotion through television, hoardings and bus shelters.

They use print ads and the television programmes are also an important marketing

medium for promotion. Some of the most famous marketing campaigns of

McDonald’s are:

- “You Deserve a break today, so get up and get away- To McDonald’s”.

- “Aap ke zamane mein ,baap ke zamane ke daam”.

- “Food, Folks, and Fun”

- “I’m loving it”.

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McDonald’s EXPERIENCE IN SERVICE INDUSTRY

Marketing in a services industry is becoming an increasingly complex challenge. The

paradigms of service marketing demand a passionate understanding of customer

expectations and perceptions and linking them to product design & delivery as well as

operational planning. This is where McDonald’s has excelled due to its ability to

successfully integrate the customer’s perspective in its product and operations in a

comprehensive manner. The revamped menu in India is an excellent example of

McDonald’s strategy of integrating the customer’s perspective in its products and the

operational integration is evident from McDonald’s emphasis on its suppliers as its

customers as well as its treatment of its consumers as co producers of services. The

ultimate aim of Service Marketing is not just to become a Service Leader but to create

service Brand. The Service Delivery Process is the key to achieving this aim of Service

Marketing.

During the Service Delivery Process, each moment of interaction between the firm and

the customer, called “Moments of Truth”, helps understand the opportunities that a firm

has to win or lose the customer. For example, these “moments of truth” are created for

McDonald’s every time the guard at the McDonald’s outlet meets the customer, every

time an attendant takes down the order from the customer waiting in queue, every time

the cashier interacts with the customer, every time the attendants help the customer

guided the customer towards the table, every time the attendant cleans the table, etc.

Managing these “moments of truth” is a great challenge in Service Marketing especially

due to customer’s involvement as a co-producer of services (e.g. McDonald’s self-service

concept wherein the customer not only collects the order but also cleans the table after

consuming the food). However, McDonald's has been able to create a great experience

for its customers by understanding the nature of the entire Service Delivery Process and

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the various stages in the process that are exposed to the customers. Transparency in the

processes at its outlet has helped McDonald’s bring the back office in its outlet at the

front so that the customer is able to know the operations and provide feedback on service

design improvements.

Internal Customer Focus is equally important as External Customer Orientation in order

to win these “moments of truth”. McDonald’s focus on its People and their service

delivery methods therefore plays a very important role in creating a successful Service

Brand. The quality and the consistency of the service delivered by McDonald’s have been

greatly enhanced by the combination of the factors mentioned above. This has helped

McDonald’s become Service Leader and a successful Service Brand. This is evident from

the fact that very few of its customers opt for take-home parcels or home deliveries while

most of them prefer to eat at the outlet and enjoy the McDonald’s experience.

McDonald’s have pioneered with innovative and sophisticated food distribution and

packaging systems when the traditional food processors were unwilling or unable to

supply food items that McDonald’s demanded. They achieved amazing consistency by

devoting more attention than anyone else to field service and training at store level.

Production was concentrated in huge plants devoted exclusively to McDonald’s.

McDonald’s also started with tiny suppliers and grew with them displaying great loyalty.

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THE IMPORTANCE OF PLC IN McDonald’s

The requirements of customers change over time and thus the product offering has to be

changed accordingly. What is the fashion today may be out of market within few weeks.

Thus continuous innovation is required. To counter these changes McDonalds has

continuously introduced new products and has phased out the old ones which were at the

decline stage of their PLC. The introduction is timed such that the new product does not

cannibalize the product already in the maturity or growth stage. Thus the secret lies in

getting profits with different products in the different stages of the PLC.

For example: The French Fries have been an important part of the McDonalds menu

worldwide. But now it was in the stage of decline and was actually not generating proper

return. In an attempt to revitalize it, a new variant was introduced namely Shake Shake

Fries. This is being served with chatpata spice mix which has resulted in increase in the

sales of French Fries and has elevated it from to the decline stage. This is used to delay

the decline of a well established product which has the potential of generating further

revenue.

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COMPETITOR’S ANALYSIS

McDonald’s has been a leading fast-foods outlet in Vile Parle. But the outlet understudy

has other competitors eating away into its market share. In addition to its traditional rivals

—KFC, Dominos, Pizza Hut—the firm encounters new challenges. Jumbo King

competes using a back-to-basics approach of quickly serving up burgers for time-pressed

consumers. On the higher end, the KFC has become potent competitor in the quick

service field, taking away customers from McDonald’s. Perhaps in the new environment,

fast, convenient service is no longer enough to distinguish the firm. At this time, a new

critical success factor may be emerging: the need to create a rich, satisfying experience

for consumers. This brings us to service and experience based competition which

McDonald’s can use for competitive advantage against Jumbo King. Keeping in mind the

demographics of the area, McDonald’s has Wi-Fi enabled the outlet to cater to the

student community. It is for this overall “Food, Fun & Folks”experience that customers

pay a premium over the other competitors. Competition also reduces product lifecycle;

inducing firms to revise their products portfolios and to revisit their product market to

understand changing needs, expectations and perception of different market segments.

The new McBreakfast is introduced from 6am to 11am as a pilot project. This opens a

whole new revenue stream for McDonald’s by tapping into the student and working

population by providing a healthy and wholesome breakfast. This shows how

demographic shift can affect the demand for products and services. McDonald’s has

anticipated these changes to maintain its competitive edge.

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CONCLUSION

So, it can be concluded from the project that beside providing good & high quality

products McDonald’s emphasis much more on providing an impressive and highly

satisfactory service to its customers by offering different attractive services such as

playing facilities for children by providing them toys , or allowing them to celebrate their

birthday parties , providing an attractive and decent ambience where teenagers can have

fun and enjoyment but can keep it affordable and even families do come for a meal and

spent a quality time.

According to my personal opinion I think McDonald is identified much more for its

service. There is a certain degree of fun and happiness that a customer feels each time he

dines at McDonalds.

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